Quarterly return of 4 billion kroner
The Government Pension Fund Global returned 0.3 percent, or 4 billion kroner, in the second quarter of 2011 after rising bond prices outweighed a slump in large parts of the stock markets.
"Signs of weaker economic growth in the US and Europe and fears of a contagion from the European sovereign debt crisis reduced investors’ risk willingness in the quarter,” says Yngve Slyngstad, chief executive officer of Norges Bank Investment Management (NBIM), which manages the fund. “At the same time, demand rose for government bonds from countries such as Germany, the UK, France and the US," says Slyngstad.
The fund’s equity holdings returned -0.7 percent in the quarter, while fixed-income investments returned 1.8 percent, as measured in international currency. The overall return was 0.1 percentage point lower than the return on the fund’s benchmark indices.
Six of the fund’s ten stock sectors fell in value in the quarter, while four rose. The fund’s best-performing investment, in nominal terms, was Swiss food producer Nestlé, followed by drug companies Sanofi and Roche. The worst-performing investment was the bank HSBC, followed by JPMorgan Chase, the second-largest US bank, and Denmark’s Vestas Wind Systems, the world’s biggest wind turbine maker.
Prices gained in all of the fund’s bond sectors in the quarter. Government bonds, which accounted for 43 percent of fixed-income investments, returned 2 percent.
The market value of the fund rose 9 billion kroner to 3,111 billion kroner in the quarter. The fund returned 4 billion kroner in the period and had 53 billion kroner in capital inflows from the government. The krone strengthened against several of the currencies the fund invests in, reducing the market value by 48 billion kroner.
The fund held 60.5 percent in equities, 39.4 percent in fixed-income securities and 0.1 percent in real estate at the end of the quarter.
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